July 27th Market Overview

Happy Monday

Stocks opened strong and gave most of it back, we might finish green but its basically a flat day. Oil fell hard after the U.S. and Iran paused fighting over the weekend
(not a ceasefire)…which should have been the story all day.

Chip trade took the wheel as usual. Nvidia is talking about guaranteeing $250 billion so OpenAI can go buy more Nvidia, and China says it can now build the machines that print chips.

Let’s dig in...

Today's Big Picture

Nvidia's OpenAI Deal Put The Chip Trade On Edge

$NVDA is in talks to guarantee roughly $250 billion so OpenAI can lease a data center project in southern Ohio, with a separate deal under discussion to finance the chips going inside it. That is Nvidia funding the customer who buys Nvidia hardware. Investors sold the whole group on it, and the S&P's semiconductor names finished as the worst corner of the market.

Oil Fell, But The Ships Have Not Moved

Brent crude went under $90 after the White House shelved plans to escalate in Iran. Ship tracker Kpler counted six to twelve daily crossings of the Strait of Hormuz over the weekend, no better than last week. So the physical supply picture is unchanged. Today's move was a bet on talks restarting, and that is worth remembering before anyone treats it as an all clear.

Big Tech Has Three Days To Answer One Question

Ten stocks now make up more than a third of the S&P 500, a record share. Microsoft, Meta, Apple, and Amazon all report between Wednesday and Thursday. Alphabet set the bar last week: cloud revenue hit $24.8 billion, free cash flow came in at negative $5.9 billion for the first time since the 2004 IPO, and the stock sold off anyway.

Market Overview

Index Performance

Stock Spotlight

Apple $AAPL ( ▲ 0.79% )  
took back the most valuable company title from Nvidia, ending a streak that had run 272 trading days. It set a record intraday high and needs $340.43 a share to become the first $5 trillion company. Earnings land Thursday.

ASML $ASML ( ▼ 5.7% )  
fell after The Information reported a Chinese state-backed firm has started mass-producing its own version of the machines that print chips. ASML has had that business almost entirely to itself.

Strategy $MSTR ( ▲ 7.73% )  
went a fifth straight week without buying bitcoin. It sold 5.4 million shares and built its dollar reserve to $3.75 billion, enough to cover roughly two years of dividend and interest payments.

Big Name Updates

Tesla $TSLA ( ▼ 1.36% )  
had its price target cut to $420 at Deutsche Bank, which still rates it a buy. The bank said the robotaxi and the Optimus robot are both scaling slower than the market expected.

Ford $F ( ▲ 1.25% )  
was upgraded to buy at Jefferies ahead of Tuesday's earnings, with the target raised to $17.50. The firm thinks the second quarter is the bottom for production volume.

AstraZeneca $AZN ( ▲ 0.77% )  
reported $15.4 billion in second-quarter revenue and kept its full-year outlook. Tagrisso, its lung cancer pill, brought in $1.9 billion.

Walmart $WMT ( ▲ 2.09% )  
had its target trimmed to $130 at Mizuho, which still likes the stock. Mizuho's read is that a few hundred delivery-only sites would put most of the country inside a thirty-minute window.

Other Notable Company News

SpaceX $SPCX ( ▼ 2.26% )  
hit a record low, now about half its post-IPO high, and has closed under its $135 offer price for eight straight sessions.

Rocket Lab $RKLB ( ▲ 3.74% )  
won a $266 million Space Force award for missile-defense work, its largest launch contract yet.

Mobileye $MBLY ( ▼ 0.62% )  
was upgraded to overweight at Piper Sandler, which raised its target to $12 after the selloff tied to Amnon Shashua's exit as chief executive.

Capricor Therapeutics $CAPR goes in front of an FDA advisory committee Wednesday, with briefing documents already questioning the trial data behind deramiocel.

Warner Bros. Discovery $WBD ( ▼ 1.65% )  
was cut to neutral at Seaport after Paramount Skydance pushed its acquisition timeline out to as late as June 2027.

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Sector Watch

Bond Market

Yields came down across the curve as oil sold off. The 10-year note sat near 4.64 and the 30-year around 5.13, both off the one-year highs they have been flirting with all month.

Policy Watch

Fed

The decision comes Wednesday at 2 p.m. Eastern, with Kevin Warsh at the podium half an hour later. It is the least predictable meeting in years.

• Nearly every economist surveyed expects no change.

• The market is fully priced for a hike by September, with a second by March 2027.

• Former Kansas City Fed president Esther George called this week a coin flip.

Fiscal And Trade

The Agriculture Department plans to reopen the border to Mexican cattle after more than a year. The ban was in place to stop the spread of screwworm, and Mexico normally sends about a million calves north each year. Tyson and JBS both rose on it, since both have lost money in their beef units this year on high livestock costs.

International

• Singapore tightened policy for a second straight meeting, moving early on oil even with inflation at home running near the bottom of its own range.

• China's industrial profits grew again in June, though the pace slowed for a second month.

• Ukraine struck Iranian vessels in the Caspian Sea and Iran summoned a Ukrainian diplomat over it. Two separate wars are starting to touch.

What to Watch

The AI company quietly automating every Walmart distribution center. 
23 billion in orders on the book.

It's just one of seven names in this free MarketBeat report.

Microsoft And Meta Wednesday

Gil Luria at D.A. Davidson framed the tell plainly: Microsoft is the cautious one, so if Microsoft signals lower spending next year, chip stocks lose their last real support.

Red Sea Shipping

Societe Generale figures every month without a resolution adds about $10 a barrel. Watch whether Houthi attacks push Saudi cargoes onto the long route around Africa.

- John

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